The Reality of Layoffs in the Tech Industry: What You Need To Do
Over 86,000 people have lost their jobs in the tech industry so far this year. That’s more than double the amount of layoffs in 2020, which was a bad year for tech due to COVID-19. And it’s only October.
The public markets have been hit hard in 2022, and that’s trickled down to the private markets. Inflation concerns, rising interest rates, and geopolitical issues have all contributed to market volatility. And when the markets are volatile, tech companies are usually the first to feel the effects.
Layoffs in the Tech Industry
So far, startup layoffs have been concentrated in a few industries: e-commerce, transportation, finance, retail, travel, and real estate. But that could change quickly, as more companies begin to feel the effects of the market downturn.
Tech companies as big as Google, Netflix, and Apple have all slashed jobs this year. And it’s not just big companies that are affected: small and medium-sized businesses have also been hit hard. Notable startups like Robinhood, Glossier, Better, Peloton, Spotify, Shopify, and Compass have all laid off employees in the past few months.
The softening of the economy has been a long time coming, and it’s finally starting to catch up with the tech industry. The question now is: how bad will it get? And will there be any industries that are immune to the effects of the downturn? Only time will tell.
If you’re a founder, might be a good time to start thinking about how you would handle a recession. Because it looks like we might be in for one.
10 Strategies for Startups to Survive a Recession
The current economic downturn has been called the “tech wreck” by some, and it’s not hard to see why. Startups are feeling the effects of the recession, with many having to lay off employees or close their doors entirely.
If you’re a startup founder, you might be wondering how you can weather the storm. Here are ten strategies for startups to survive a recession:
1. How much cash do you have on hand?
Having cash on hand is key during a recession. If you’re running a lean startup, now might be the time to raise more money and build up your cash reserves.
2. What are your burn rate and the runway?
Your burn rate is the rate at which you’re spending money. Your runway is the amount of time you have to achieve profitability. If your burn rate is high and your runway is low, you might need to make some changes to your business model.
3. How diversified is your business?
If your startup is focused on one industry, it could be more vulnerable to an economic downturn. Diversifying your business can help mitigate some of the risks.
4. What are your fixed costs?
During a recession, revenues will likely go down while costs remain the same or increase. That’s why it’s important to know your fixed costs so you can make necessary cuts if needed.
5. How nimble is your team?
In a downturn, companies need to be able to pivot quickly. That means having a team that’s agile and can adapt to change.
6. Are your investors still committed to funding you?
Investors may be more hesitant to invest during a recession. Make sure you have a good relationship with your investors and that they’re still committed to funding your startup.
7. How flexible is your business model?
During a recession, people’s spending habits change. That means your business model needs to be flexible so you can adjust to the new reality.
8. Can you make cuts without sacrificing too much growth?
During a recession, you might need to make cuts to survive. But be careful not to cut too much or jeopardize your startup’s growth.
9. Delay big decisions
In a recession, it’s important to be cautious. That means delaying big decisions like hiring new employees or expanding into new markets. Instead of making rash decisions, take the time to think things through and make sure it’s the right move for your startup.
10. What is your plan B?
No one likes to think about worst-case scenarios, but it’s important to have a plan B in case things go south. Determine what you would do if your startup ran into trouble and ensure you have a backup plan.
If you’re a startup founder, the reality of layoffs in the tech industry is something you need to be prepared for. Understanding how a recession could affect your startup and making some strategic decisions now can help weather the storm.
5 Strategies for Employees to Survive a Recession
If you’re an employee at a startup, you might be wondering how you can survive a potential layoff. Here are ten strategies for employees to survive a recession:
Keep your skills up to date
In a downturn, companies will be looking to cut costs. That means employees who are skilled and have up-to-date skills will be more likely to keep their jobs. If you’re not sure if your skills are up to date, consider taking some courses or getting certifications.
In a recession, companies will be looking for employees who are flexible and can adapt to change. If you’re able to take on different roles or responsibilities, that will make you more valuable to your company.
Be willing to relocate
During a downturn, companies may be more likely to relocate their operations to cheaper locations. If you’re willing to relocate, that will make you more attractive to employers.
Be a team player
In a recession, companies will be looking for employees who are team players and can work well with others. If you’re able to cooperate and collaborate with your colleagues, that will make you more valuable to your company.
In a recession, it’s important to remain positive. Companies will be looking for employees who are upbeat and can maintain a positive attitude. If you can stay positive, that will make you more attractive to employers.
The Bottom Line
While no one likes to think about layoffs, it’s important to be prepared. If you’re a startup founder, make sure you have a plan in place. And if you’re an employee, consider taking steps to improve your chances of surviving a layoff.
This is a difficult time for everyone, but by being prepared and making some strategic decisions, we can all get through this.
Hang in there!